Why Kmart is Sears' Track to Profitability
Sears' (SHLD) chairman Eddie Lampert must be doing a jig right now to the tune of 6.3 percent. That's the increase in the company's fiscal fourth-quarter profit forecast which blew past analysts' projections. Lampert's probably chanting a 4-letter word mantra, too, and it doesn't start with an F. It's Kmart.
Kmart's 3.4 percent rise in comps continues to prove it's the little retail engine that could, even though it's still playing second fiddle to parent-chain Sears (where comps declined 5.3 percent).
Kmart's fighting hard against shabby stores and shoddy merchandising by flogging footwear, toys and apparel that shoppers actually want to buy, even in dingy surroundings.
Exclusive design collaborations such as Selena Gomez' Dream Out Loud collection for teens certainly helped. As did the re-tooling of Kmart's entire apparel strategy which ditched underperforming lines and consolidated others.
Part of that's because Kmart Design, the company's creative hive, is 250 style specialists strong, and they've collectively churned out home goods, clothing and accessories that scored high fashion points on design blogs and magazine editorials. Take for example this season's trendy skinny cargo trouser. J Brand had its label on all manner of celebrity asses, but those who couldn't shell out two Benjamins for here-today-gone-tomorrow style could certainly afford the $25 pair Kmart was shilling.
Furthermore, while Kmart took the less risky road and didn't roll out those of-the-moment styles to smaller cities, management certainly stepped up the social media efforts to make up for the short fall. Tackle complaints and questions in 140 characters, the Twitterers behind Kmart Design fielded fashionistas' questions about availability of coveted new items and, in some cases, helped them find a store to buy them.
Kmart's still got work to do in other areas. Many stores badly need makeovers. Food and other consumables declined. That means Smart Sense, Kmart's private label line that includes snacks and beverages, oral care, paper products, household cleaners and over-the-counter medications, isn't exactly resonating with customers â€" even at prices 20 percent below name brands.
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